Meet Douglas Edelman – the 73-year-old defense contractor who became one of America's biggest alleged tax cheats after striking gold with a $7 billion military contract.
This story starts in the early 1990s when Edelman left Texas to chase opportunities in post-Soviet Russia and later Kyrgyzstan. After 9/11, he and a partner in Kyrgyzstan landed a massive military contract providing fuel and services for US troops in Afghanistan.
He's one of those guys who cashed in big on the war. The contract made him a multimillionaire and bankrolled a lavish lifestyle with his French wife, Delphine – multiple European homes, yachts, and a $43 million London mansion.
Prosecutors claim Edelman used a classic ownership shell game: falsely reporting that his French wife owned the defense contracting companies since, as a French citizen, she wouldn't face US tax obligations.
Meanwhile, he reported less than $1 million in annual income as a mere "consultant" to these companies from 2016 to 2020.
Edelman was trying to dodge a unique aspect of US taxation: America taxes global income regardless of where you live.
As we discussed in Episode 430 of The Accounting Podcast, these high-profile cases serve as powerful reminders of what's at stake with IRS budget cuts and the terminations of thousands of revenue agents going after alleged tax cheats like Edelman.
